A kind of dynamic water-release composite coated fiber used for water saving afforestation in desertification area is prepared. The coat is composed of polyacrylamide and montmorillonite grains with an appropriate proportion. TG/DTA thermal analyzer is used to study coat water adsorption-desorption performance. Rapid moisture tester is used to analyze the water-releasing characteristic of the coat in different temperature and different soil moisture. Environmental scanning electron microscope (ESEM) is used to observe coat surface morphology. Finally, the water-transferring mechanism is studied. The results show that polyacrylamide and montmorillonite grains have a great influence on the water retention property and water permeability of the coat, respectively. Water-transferring rate of the coat can be effectively improved by designing the proportion of polyacrylamide and montmorillonite grains. Water potential influences the water-transferring rate significantly. When the outside soil inclines to be droughty or the temperature is going up, water potential of soil is lower than the potential of the coat, polyacrylamide shrinks with dehydration. Montmorillonite grains bridge together and in the state of “bridge-connection”. Water is transferred quickly along the channels of grains and water-transferring rate of the coat accelerates. When soil is getting wet or temperature is going down, water potential of soil is higher than the potential of the coat, polyacrylamide swells because of high water-potential. Montmorillonite grains split and in the state of “bridge-break”. Water is transferred slowly relying on the absorption-desorption of polyacrylamide and water-transferring rate decreases. So the composite coat can self-adjust soil moisture to guarantee plants survival and make full use of water resources.